SAN DIEGO–Following air freight’s stellar performance in 2017 and the ongoing growth so far in 2018, industry organizations have expressed concerns about the slower rate of growth in recent months, as well as the impacts of a global trade war on the air cargo market.
Not the panelists at today’s Cargo Facts Symposium here, however.
“The peak will march on,” said Michael Steen, Executive Vice President and Chief Commercial Officer, Atlas Air Worldwide.
Along with Steen, panelist Ian Morgan, Vice President Cargo Americas, Qatar Airways Cargo, noted that the tariffs imposed on trade between the United States and China have so far not negatively affected air freight volumes. If the trade issues between the two countries are not resolved and the trade war has a long-term impact on the market, that would likely change, but Steen is optimistic that even in that scenario, the market will adjust.
“It’s likely we’ll see manufacturing moving out of China to Vietnam, if the trade war continues,” Steen said during the panel. Meanwhile, “the industry is in a ‘wait and see’ mode,” he said, as the tariffs have not trickled down to impact air freight’s bottom line.
Of course, apart from China-US trade, there are many other bright spots for air freight that the panelists expect will continue to buoy air freight performance through 2019. Gerald Lee, CEO of Brazil-based Modern Logistics, pointed to the current state of infrastructure in Brazil, which he said is a “huge gap” in the country’s ability to handle more air cargo.
“There are so many places in the world that don’t have [adequate] infrastructure,” Lee said during the panel, noting that the people living there want the same products and same connectivity available in markets dominated by e-commerce and high-speed delivery. Such markets can look forward to similarly rapid expansion of air freight to support developing e-commerce, he said.
And just how will those growing markets and air cargo sectors meet growing demand? In addition to steady passenger-to-freighter conversions of 767s likely to continue, as feedstock still remains fairly plentiful — estimated by Rich Corrado, Chief Operating Officer of Air Transport Services Group, at around 300 units remaining — there are opportunities for new conversion programs and the expansion in market share of airframes that have only marginally entered the air cargo space so far.
Steen and Corrado both seemed cautiously optimistic that a 777 passenger-to-freighter conversion program might soon enter the market, and Corrado noted that ATSG has had discussions about the possibility with IAI-Bedek and Boeing.
Corrado also said that while the A330-200F has faced significant challenges competing with other widebody freighters, freighter-converted A330-300s will likely be a good alternative to the 767F in three-to-five years, as feedstock for the airframe becomes more competitive.